You sell the patents, we do the rest —

World’s biggest patent troll saves Kodak from bankruptcy

Intellectual Ventures group will buy up Kodak's patents for $525 million.

A group of 12 buyers has been found to buy Kodak's portfolio of 1,100 patents for $525 million. The sale is just about the bare minimum that is needed to keep the storied photo company alive; by selling its patents, it will meet the qualifications to get another $830 million loan, and it should be able to climb out of bankruptcy sometime next year.

The purchasing group was organized by Intellectual Ventures, the world's biggest patent-holding company, and RPX Corp., a defense-oriented patent aggregator. Intellectual Ventures will retain ownership of the patents, subject to all licenses.

According to the LA Times, bankruptcy filings show that the twelve buying companies are: Google, Apple, Facebook, Research in Motion, Amazon, Microsoft, Samsung, Adobe, Huawei Technologies, HTC, Fujifilm, and Shutterfly.

Kodak has sued several members of that list for patent infringement, including Samsung, Apple, RIM, HTC, and Shutterfly. The sale agreement is also an agreement to end all existing litigation between Kodak and any buyers, according to Kodak's statement on the deal.

“This monetization of patents is another major milestone toward successful emergence,” Antonio M. Perez, chairman and chief executive officer, said. “Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company.”

However, many Kodak patents may still end up out "in the wild" and could be used in lawsuits. The group of 12 paid for a "portion" of the sale, but Intellectual Ventures is actually going to own the portfolio and can use it as it wishes—it just can't sue already-licensed companies, such as this group of 12 buyers.

Intellectual Ventures has filed several lawsuits of its own in the past few years, and has also handed off patents to smaller patent-holding companies to use in litigation.

That's a roundabout way of saying that Kodak patents may well be popping up in future patent troll suits in the future. After all, somebody is going to have to get their $525 million back.

So what does Kodak plan to do as a company with no patents and no explicit future plans?

divide 525 million by whoever is left i guess.

Well, the article states that Kodak is going to qualify for an $830 million loan. I assume that means they're going to keep trying to operate the company by doing... what, exactly?

Kodak got into this mess by not evolving [successfully] into the digital age when all signs pointed to that being the direction of photography, and now that they have an infusion of cash their plans are: Kodak's Future Plans - Press Release

I don't see them being relevant in another couple years when their money runs out again.

Inkjet printers are barely used anymore, most people don't print photos anymore, and there are a dozen websites for photo management (not the least of which, Facebook, could be considered one). That's not innovation.

Edit: As someone else pointed out in the comments below, Kodak has dropped all the above paths in favor of commercial printing. My conclusions still stand.

Edit #2: Added "successfully" above, since some posters are taking "not evolving" to mean "didn't try to evolve" as opposed to "failed at it."

I just hope all the workers have had the sense to find employment elsewhere by now. I don't want to hear any crying about lost jobs when the last office door is pad locked. Kodak has been dying for a long while.

Kodak got into this mess by not evolving into the digital age when all signs pointed to that being the direction of photography

Stop saying Kodak didn't evolve into the digital age. Much of what they just sold relates to digital. Much of what (little) continues to generate revenue is digital. Many digital imaging technologies we take for granted were developed at Kodak.

Call them out for mismanagement and lack of vision if you want, but don't parrot this tripe about Kodak not going digital.

Well, now I know why google and apple were working together: Their unholy alliance would have been far better than this.

Think of it this way......If I work with my "enemy" to ensure other "enemies" do not appear, then we assure that neither of us would have to deal with potential challengers. We maintain our status quo of us both being "kings of the hill" to duke it out with each other at our leisure. We both make out like kings.

So what does Kodak plan to do as a company with no patents and no explicit future plans?

Largely, without their patent library, there isn't much that can be done. At least, not in the USA. You need a couple of thousand patents to operate in the technology sector here. However, that does not mean that they haven't been focused on other markets or attempting to court being bought out. They have a long history and presumably, some talented engineers.

Personally, without their patent library, however, I don't think Kodak would be a good buy. With the patents, you might be able to buy them up for cheap given their market condition and get more for your money than just the market value (Ex. Google buying Motorola).

While shedding the patent library would reduce the cost of acquiring them even further, I think they have just shed the last remaining piece that anyone would want, and did so in a way that did not ensure their survival.

So what does Kodak plan to do as a company with no patents and no explicit future plans?

divide 525 million by whoever is left i guess.

The story mentions $830 million loan... It seems they still expect to provide some kind of services / produce something

Exec can still get bonuses then default on the loans.

That's how Hollywood does it. Most people working with Hollywood get paid up-front or get a contract with the parent company, but the shell company takes out debts, only to default on them. Business as usual.

Kodak got into this mess by not evolving into the digital age when all signs pointed to that being the direction of photography

Stop saying Kodak didn't evolve into the digital age. Much of what they just sold relates to digital. Much of what (little) continues to generate revenue is digital. Many digital imaging technologies we take for granted were developed at Kodak.

Call them out for mismanagement and lack of vision if you want, but don't parrot this tripe about Kodak not going digital.

But that is what mismanagement did, not going full steam ahead with digital. They held onto their cash cow film photography business until they went down with it. Their digital cameras have never been great. They did not get decent until it was to late to get a strong market share. While their debt built up on businesses with declining revenue, while digital barely had any growth.

Their Kiosks and Small photo Printers have been good products for the price and convenience. But once 1hr photos launched Online services, the Kiosks were only good for scanning photos in (and if wanted that glossy look).

Why does purchasing these patents make Intellectual Ventures a troll? Patents can be bought and sold like any other property.

Owning a patent is fine, what is considered Trolling is owning a broad patent -that you as a company do not use- for the sole purpose of litigating against others for profit. This directly damages the consumer by shutting down products and raising prices (even if the product does not get removed from market) with no benefit to the consumer at all: the patent is not being used by the company on a competing product. Many companies defined as patent trolls produce no product and exist solely to litigate with patents, and own said patents solely for litigation as their line of business. Frequently, they will wait YEARS after the introduction of a product, and then litigate, claiming lost profit or damages wracked up by years of infringement.

Thus, this earns a pretty poor opinion from the public, and even from many companies.

Example: Company A produces no product and consists only of a few lawyers. They own a patent for displaying interactive content in a webpage. They do not have a webpage. They begin litigating against other companies that actually DO produce goods, and use interactive webpages in their business. They can target any large company, because all companies use interactive webpages.

Why does purchasing these patents make Intellectual Ventures a troll? Patents can be bought and sold like any other property.

A patent troll is a company without products that exists only to own patents and sue others. IV is the perfect example.

But this definition would also include universities etc. who invent/patent things (which are often then stuck into a 'holding' company) but then intend to license them for revenue, rather than go into business producing consumer products/medicines or whatever themselves.

As far as I know IV doesn't manufacture anything, but they do have one of the most impressive R&D labs. They do make stuff, but it's almost all related to research to get more patents and not for actual consumers. IV licences their hardwork and research.

Then on the flipside, IV is supposed to represent a group of the major tech companies to protect their patents. This is where they get the bad name (and deservedly)

So what does Kodak plan to do as a company with no patents and no explicit future plans?

divide 525 million by whoever is left i guess.

Well, the article states that Kodak is going to qualify for an $830 million loan. I assume that means they're going to keep trying to operate the company by doing... what, exactly?

Kodak got into this mess by not evolving into the digital age when all signs pointed to that being the direction of photography, and now that they have an infusion of cash their plans are: Kodak's Future Plans - Press Release

I don't see them being relevant in another couple years when their money runs out again.

Inkjet printers are barely used anymore, most people don't print photos anymore, and there are a dozen websites for photo management (not the least of which, Facebook, could be considered one). That's not innovation.

Since that press release Kodak's announced the intent to sell/close it's inkjet, scanner, film, and kiosk businesses.

Apparently they're still intending to stay in the high end commercial printing business; I'm not sure how their market share there is doing but with per printer revenues of $1m and up they don't need to keep a huge number of customers to maintain a large income. As of early this year they still had $5bn/year in revenue; so despite the implosion of their consumer divisions they've clearly still got some things that could work to keep them afloat.

As far as I know IV doesn't manufacture anything, but they do have one of the most impressive R&D labs. They do make stuff, but it's almost all related to research to get more patents and not for actual consumers. IV licences their hardwork and research.

Then on the flipside, IV is supposed to represent a group of the major tech companies to protect their patents. This is where they get the bad name (and deservedly)

One of the most impressive R&D labs? That's quite an exaggeration. Can you name a few patents from 'IV labs' that have truly advanced the state of the art in any field?

Of course they're eager to show a few pictures of equipment and list some PhDs who are associated with their various 'labs' on the website. This provides a front of legitimacy to their operation. However, all accounts point to the fact that the vast majority of their revenue comes from hoarding patents from other companies and extorting licensing fees under the threat of litigation.

What happens with regards to Kodak and the patents being sold? Does Kodak still have rights to build products where these patents may come into play? Do they have to license their patents back in order to use them (potentially reducing the amount gained from the sale)? Can these companies now sue Kodak for existing products that infringe, which is likely since they built products based on them in the first place?

Apparently they're still intending to stay in the high end commercial printing business; I'm not sure how their market share there is doing but with per printer revenues of $1m and up they don't need to keep a huge number of customers to maintain a large income. As of early this year they still had $5bn/year in revenue; so despite the implosion of their consumer divisions they've clearly still got some things that could work to keep them afloat.

Wow, that's interesting. Although that might keep them afloat for a while, the lack of diversification can't be good. I know printing and paper goods are still big, but everything is increasingly going digital, as shown by the continuing decline of print media, among other things.

Kodak got into this mess by not evolving into the digital age when all signs pointed to that being the direction of photography

Well, that's a complete re-writing of history.Fact is, Kodak was one of the first on the scene with good quality consumer digital cameras. For several years, their cameras were affordable, class-leading gear. Now, I absolutely believe Kodak dropped the ball by not taking their early success and building on it. Instead, they stayed with their earlier designs and got run-over by more innovative designs. But, that's hardly a failure to "evolve into the digital age", as if they stayed with film until the end.

Why does purchasing these patents make Intellectual Ventures a troll? Patents can be bought and sold like any other property.

A patent troll is a company without products that exists only to own patents and sue others. IV is the perfect example.

But this definition would also include universities etc. who invent/patent things (which are often then stuck into a 'holding' company) but then intend to license them for revenue, rather than go into business producing consumer products/medicines or whatever themselves.

Exactly. My discomfort is with applying the pejorative term "troll" to anyone who sells licenses to patents. Patents are property independent of any manufacturing. Many patent owners generate income by selling the patent (or licenses) instead of manufacturing products. What difference does it make if the owner of the patent is the original inventor or an entity that purchased the patent from the inventor?

Intellectual Ventures may be a sleazy company, but not because it purchases patents.

Why does purchasing these patents make Intellectual Ventures a troll? Patents can be bought and sold like any other property.

I agree.

Ars I'm disappointed by this headline. It's one thing to discuss the term "Patent Troll" in the abstract but with it's obviously negative connotations it shouldn't be applied lightly. In this case it's done carelessly and without any analysis.

In this case the "Troll" ended up being the highest bidder. Patents exist to generate revenue for their creators and here, clearly, the "Troll" was facilitating exactly that.

Obviously the negative ratings given to comments like this illustrate the minority of my opinion on this particular matter. But if I wanted low quality popularity based news with artificially combative headlines I'd go elsewhere.

Apparently they're still intending to stay in the high end commercial printing business; I'm not sure how their market share there is doing but with per printer revenues of $1m and up they don't need to keep a huge number of customers to maintain a large income. As of early this year they still had $5bn/year in revenue; so despite the implosion of their consumer divisions they've clearly still got some things that could work to keep them afloat.

Wow, that's interesting. Although that might keep them afloat for a while, the lack of diversification can't be good. I know printing and paper goods are still big, but everything is increasingly going digital, as shown by the continuing decline of print media, among other things.

Some categories of commercial printing (ex treespam, printed magazines) are in trouble; but retail signs and packaging should remain safe for at least a decade. Assuming they can shed enough bad debt in bankruptcy Kodak does appear to have at least on major business unit viable in the midterm. That said, I wouldn't be surprised if a healthier rival ends up buying them up at some point.